The government has allocated £240m in the next financial year to pay for the high profile defeat it suffered which was spearheaded by Joanna Lumley in support of the Gurkhas. The Treasury will pay out an additional £70m this year as a result of the peace settlement agreed in the summer which allows the regiment's soldiers, who retired before 1997, to be given an automatic right to live here. The cost of the new policy is contained in one line of figures released as part of the pre-budget report under the title "Gurkhas: removal of 1997 cut-off".

A Treasury spokesman confirmed that the move is the result of a change in policy after the high profile campaign on behalf of former Gurkhas living in Nepal and surviving on Ministry of Defence pensions.

The final payouts were only agreed in May after the high court branded the treatment of the Gurkhas unlawful and the government was defeated in the House of Commons. But final victory was considered sealed when Lumley managed to confront home office minister Phil Woolas live on television.

An earlier ban on British residency was lifted for fighters who retired after July 1997 – on the handover of Hong Kong – but those who retired early were only given the right to stay in Britain under exceptional circumstances.